Renewing Solar Energy

Legislation seeks to extend tax credits for the
solar energy and other renewable energy industries.

Is coal, albeit cleaner coal, worth more to the
government than the sun? It would seem so.

When Congress handed out tax credits in 2005 to spur development of cleaner
sources of energy, legislators originally gave homeowners two years for tax
credits to install solar equipment that would turn the sun’s energy into
electricity or hot water. Those credits already were set to expire at year’s
end, if Congress hadn’t tacked on another two years late in
2006.

Meanwhile, the original legislation gave energy companies eight years to take
tax credits to build “clean” coal facilities.

Now a consortium of green and alternative energy companies is lobbying for new
legislation to put renewable energy sources on a more even keel with
traditional fossil fuels.

The Securing Energy Independence Bill, introduced earlier this year, would
extend the various tax credits for commercial and residential solar
installations for eight more years to further grow the industry.

Currently, less than 7 percent of energy consumed in this country comes from
renewable sources, such as solar, wind, hydroelectric and geothermal. The rest
of the pie mainly comes from fossil fuels and nuclear
power.

To better compete with well-established sources, the renewable industry has
always relied on tax credits. Today’s solar equipment is a far cry from what
was installed in the late-1970s, but no one wants to replay what happened after
similar tax credits ended in the 1980s, promptly turning the lights off for
much of the U.S. solar energy market.

Rhone Reasch, president of the Solar Energy Industries Association, testified
last April on Capitol Hill on the need to “establish parity” between
congressional support for other power sources and solar.

The SEIA represents more than 500 companies, largely manufacturers of
photovoltaic panel and thermal storage units. Reasch told lawmakers that
long-term incentives are needed to convince the industry to invest in the U.S.
market.

“Such an extension will provide the long-term market demand signal that solar
energy needs to transition from a nascent market to a mature one,” he said.
“New U.S. manufacturing facilities will not be constructed unless there is
business and investor confidence that the U.S. marketplace will experience a
long, steady and robust demand cycle for solar energy
products.”

Reasch also pointed out that solar energy is unique from other renewable
technologies since it is installed directly at homes and businesses - a
characteristic that requires training for electricians, plumbers and
roofers.

“The creation of an entirely new specialized workforce requires substantial
time and expenditure by that industry that will not occur without long-term
extension and improvement of the tax credit,” he added.

Legislative Background

The Energy Policy Act of 2005 created commercial and
residential investment tax credits for solar energy systems placed in service
from Jan. 1, 2006, to Dec. 31, 2007.

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